Don't Pay CPP Through Dividend Income - Read This if You Are Self Employed

I'm not an accountant, so deal directly with your accountant on these types of matters.  If you need an accountant I can refer.  

The best way to explain it is what I do personally.

1. All of my revenue goes through a corporation
2. I claim expenses against revenue
3. I do not pay salary to myself
4. I pay corporate taxes based on net income
5. I pay out dividends to myself and the other shareholders

All of our income is dividends.

CPP is based on personal income and not dividend income.   

If you are self employed it's up to $4500/year in savings.  If you are income splitting, it doubles to $9000/year.  

This way you save $9,000/year in CPP payments.

***Numbers are approximate